iPad App Revenue Catching up with iPhone Faster than Expected

In an interview with App Annie‘s Oliver Lo, one central theme emerged: the remarkable growth of the iPad app revenue. iPad revenue nearly doubled year-over-year between January 2012 and January 2013.

“This significantly outpaces iPhone growth and speaks to a number of factors”, notes Mr. Lo. “With the launch of the iPad mini and the new iPad with Retina display, Apple has placed two very different price points, screen qualities and form factors in the hands of consumers and has grown the total monetizable user base available to iPad app publishers.”

iPad App Revenue Growth Outpaces Its Download Growth

Interestingly, the iPad application revenue seems to be caching up to iPhone app revenue much faster than the download gap is narrowing. In download numbers, iPad app volume is still roughly 70% below iPhone app volume. But revenue generated by iPad apps is less than 30% below iPhone app revenue. This might have something to do with the emergence of relatively complex and rich simulation and strategy games that leverage the size of the iPad display.

Back in 2009-2010, blockbuster apps were typically very simple and offered short gameplay that suited iPhone well; Angry Birds, Fruit Ninja and Doodle Jump reigned. During the year 2012, games like Clash of Clans, Hay Day, Minecraft and DragonVale became massive revenue generators on iPad. These games featured more complex world-building and item juggling than iPhone apps typically offered. Each of them crossed over well to the iPhone platform, but the amount of graphical detail and the sheer size of their item management systems have made the tablet platform a natural home for them.

Most of these new generation strategy and simulation games featured seductive in-app purchase strategies that turned consumers into permanent cash cows, trickling dollars to vendors on a weekly basis. This has helped turn them into iPad revenue machines. Many of the biggest current mobile game houses are now gearing to launch the next wave of strategy/simulation games that feature even more expansive maps and deeper game play – and will likely favor iPad as their lead platform.

In an interview with Carl Manneh from Mojang, Mr. Manneh mentioned that the mobile version of Minecraft has sold more than 5 million units at a stiff, $7 download price over the past six months. Minecraft became a staple in the iPad Top 10 download chart during the summer of 2012, at the same time the simulation juggernaut Clash of Clans rose to become the top iPad revenue generator. These new, sprawling fantasy games offer substantial expansion packs every few months and typically require more frequent playing sessions than the older generation of simple apps.

It will be interesting to see whether the new prominence of the iPad as an app platform will help old console warhorses like Electronic Arts and Activision to find a better footing in the mobile game market.

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